Written by The Banking Post
The Bangladesh Securities and Exchange Commission has ordered Vanguard Asset Management to refund more than Tk 205.9 million to a mutual fund after making investments in two non-listed companies in violation of securities rules.
The regulator warned that failure to comply within 30 days could trigger a penalty of Tk 227.5 million, along with an additional fine of Tk 10,000 per day for continued non-compliance.
The decision was taken at a commission meeting chaired by BSEC Chairman Khondoker Rashed Maqsood.
According to the regulator, Vanguard used money from the Vanguard AML Rupali Bank Balanced Fund to invest Tk 15 million in Bengal Poly & Paper Sack in 2013 and another Tk 60 million in AFC Health in 2017 by purchasing shares of the non-listed firms.
BSEC said the investments breached mutual fund rules, which generally prohibit exposure to non-listed companies unless they are pre-IPO investments that later enter the stock market. In this case, neither company was listed.
“The commission directed Vanguard Asset Management to refund the amount along with returns equivalent to a 7 to 10-year investment period,” a regulator official said.
If the company fails to return the funds within the stipulated period, it will be required to settle the amount from its own accounts.
The regulator also fined Investment Corporation of Bangladesh Tk 1.5 million for failing in its duty as trustee of the fund, saying it did not exercise proper oversight to protect unit holders’ interests.
In addition, audit firm Malek Siddiqui Wali & Co. has been referred to the Financial Reporting Council for further action over disclosure concerns in the fund’s audit report.
Market analysts said the move reflects a tougher regulatory approach, with accountability now extending beyond fund managers to trustees and auditors as authorities seek to strengthen governance and restore confidence in the mutual fund sector.
